Credo Technology Group Holding Ltd

Previous wording

During the three months ended August 2, 2025 and August 3, 2024, we generated $223.1 million and $59.7 million in total revenue, respectively. Product sales revenue comprised 97.3% and 96.0% of our total revenue in the three months ended August 2, 2025 and August 3, 2024, respectively, and IP license revenue represented 2.7% and 4.0% of our total revenue in the three months ended August 2, 2025 and August 3, 2024, respectively. Geographically, 37% and 18% of our total revenue in the three months ended August 2, 2025 and August 3, 2024, respectively, was generated from customers in North America, and 63% and 82% of our total revenue in the three months ended August 2, 2025 and August 3, 2024, respectively, was generated from customers in the rest of the world, primarily in Asia. During the three months ended August 2, 2025 and August 3, 2024, we generated $63.4 million in net income and $9.5 million in net loss, respectively.

Current wording

During the three and six months ended November 1, 2025, we generated $268.0 million and $491.1 million in total revenue, respectively, and during the three and six months ended November 2, 2024, we generated $72.0 million and $131.7 million in total revenue, respectively. Product sales comprised 97.5% and 97.4% of our total revenue in the three and six months ended November 1, 2025, respectively, and 95.9% in both the three and six months ended November 2, 2024, and IP license revenue represented 2.5% and 2.6% of our total revenue in the three and six months ended November 1, 2025, respectively, and 4.1% in both the three and six months ended November 2, 2024. During the three and six months ended November 1, 2025, we generated $82.6 million and $146.0 million in net income, respectively, and during the three and six months ended November 2, 2024, we generated $4.2 million and $13.8 million in net losses, respectively.

Previous wording

We sell our products to hyperscalers, original equipment manufacturers (OEMs), original design manufacturers (ODMs) and optical module manufacturers, as well as to companies in the enterprise and HPC markets. We work closely and have engagements with industry-leading companies across these segments. A relatively small number customers have historically accounted for and continue to account for a significant portion of our revenue. We report revenue by customer in our financial statement disclosure based on the contracting parties who place purchase orders or sign revenue contracts with us. See Note 3 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. However, certain of our end customers have their contract manufacturing partners place orders with us. As a result, the contract manufacturers, rather than the end customers, are reported as our customers for financial reporting purposes. As a supplement to our financial statement footnote disclosure, and to provide further insight into our end customer concentration, the following table summarizes our revenue by customer as a percentage of total revenue based on end customer profile, rather than based on the contracting parties who place purchase orders or sign revenue contracts with us:

Current wording

We sell our products to hyperscalers, original equipment manufacturers (OEMs), original design manufacturers (ODMs) and optical module manufacturers, as well as to companies in the enterprise and HPC markets. We work closely and have engagements with industry-leading companies across these segments. A relatively small number of customers have historically accounted for and continue to account for a significant portion of our revenue. We report revenue by customer in our financial statement disclosure based on the contracting parties who place purchase orders or sign revenue contracts with us. See Note 3 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. However, certain of our end customers have their contract manufacturing partners place orders with us. As a result, the contract manufacturers, rather than the end customers, are reported as our customers for financial reporting purposes. As a supplement to our financial statement footnote disclosure, and to provide further insight into our end customer concentration, the following table summarizes our revenue by customer as a percentage of total revenue based on end customer profile, rather than based on the contracting parties who place purchase orders or sign revenue contracts with us:

Previous wording

Comparison of Three Months Ended August 2, 2025 and August 3, 2024

Current wording

Comparison of Three and Six Months Ended November 1, 2025 and November 2, 2024

Previous wording

Total revenue for the three months ended August 2, 2025 increased by $163.4 million, compared to the same period in fiscal year 2025, primarily due to an increase in product sales revenue of $159.7 million.

Current wording

Total revenue for the three months ended November 1, 2025 increased by $196.0 million, compared to the same period in fiscal year 2025, primarily due to an increase in product sales revenue of $192.2 million and IP license revenue of $3.8 million.

Previous wording

The increase in IP license revenue for the three months ended August 2, 2025, compared to the same period in fiscal year 2025, was primarily due to sales of IP licenses to a new customer.

Current wording

The increase in IP license revenue for the three months ended November 1, 2025, compared to the same period in fiscal year 2025, was primarily due to sales of IP licenses to new customers.

Previous wording

The increase in product sales revenue for the three months ended August 2, 2025, compared to the same period in fiscal year 2025, was primarily due to a significant increase in the volume of unit shipments of AEC products which contributed over 95% of the increase in product sales revenue. The AEC sales increase was primarily driven by the ramp-up of our AEC solutions at two of our hyperscale data center customers during the three months ended August 2, 2025.

Current wording

The increase in product sales revenue for the six months ended November 1, 2025, compared to the same period in fiscal year 2025, was primarily due to a significant increase in the volume of unit shipments of AEC products which contributed over 95% of the increase in product sales revenue. The sales increase was primarily driven by the ramp-up of our AEC solutions at our hyperscale data center customers during the three months ended November 1, 2025.

Previous wording

Cost of revenue for the three months ended August 2, 2025 increased by $50.3 million, compared to the same period in fiscal year 2025, primarily due to increased shipments of AEC products noted above. The cost of IP license revenue was not material in the periods presented.

Current wording

Cost of revenue for the three months ended November 1, 2025 increased by $60.5 million compared to the same period in fiscal year 2025, primarily due to the increased shipments of AEC products noted above. The cost of IP license revenue was not material in the periods presented.

Previous wording

Gross margin in the three months ended August 2, 2025 increased by 5.0 percentage points compared to the same period in fiscal year 2025, primarily driven by the improved economies of scale in our product sales.

Current wording

Gross margin in the three months ended November 1, 2025 increased by 4.3 percentage points compared to the same period in fiscal year 2025, primarily driven by the improved economies of scale in our product sales.

Previous wording

Research and development expense for the three months ended August 2, 2025 increased by $22.0 million compared to the same period in fiscal year 2025. The increase was due primarily to a $10.1 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, a $3.5 million increase in personnel costs as a result of new hires for product development and a $6.8 million increase in higher engineering activities relating to testing and laboratory supplies for new product development.

Current wording

Research and development expense for the three months ended November 1, 2025 increased by $26.2 million compared to the same period in fiscal year 2025. The increase was due primarily to a $16.6 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, a $5.2 million increase in personnel costs as a result of new hires for product development, a $1.4 million increase in design activities and higher engineering activities relating to testing and laboratory supplies for new product development, and a $1.1 million increase in depreciation expense associated with an increase in R&D equipment.

Previous wording

Selling, general and administrative expense for the three months ended August 2, 2025 increased by $15.9 million compared to the same period in fiscal year 2025. The increase was primarily due to a $8.8 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, $2.9 million increase in personnel costs as a result of higher selling, general and administrative headcount, and a $3.1 million increase in external consultation fees relating to general and administrative expenses.

Current wording

Selling, general and administrative expense for the three months ended November 1, 2025 increased by $22.2 million compared to the same period in fiscal year 2025. The increase was primarily due to a $12.1 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, $4.2 million increase in personnel costs as a result of higher selling, general and administrative headcount, a $5.5 million increase in external consultation fees relating to general and administrative expenses, and acquisition-related costs relating to the Hyperlume acquisition.

Previous wording

Provision for income taxes for the three months ended August 2, 2025 increased by $0.7 million, compared to the same period in fiscal year 2025. The increase was primarily driven by higher pre-tax income generated in tax-paying jurisdictions in the three months ended August 2, 2025 as compared to the same period in fiscal year 2025.

Current wording

Provision for income taxes for the three and six months ended November 1, 2025 increased by $0.8 million and $1.4 million, respectively, compared to the same period in fiscal year 2025. The increase was primarily driven by higher pre-tax income generated in tax-paying jurisdictions during the current year relative to the same period in fiscal year 2025.

Previous wording

Our activities consist primarily of selling our products, licensing our IP, providing product services, and conducting research and development of our products and technology. As of August 2, 2025 and May 3, 2025, we had $219.6 million and $236.3 million in cash and cash equivalents, respectively, and working capital of $695.2 million and $605.8 million, respectively. Our principal use of cash is to fund our operations and invest in research and development to support our growth. See Note 7 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a further discussion of our cash requirements under non-cancelable purchase obligations.

Current wording

Our activities consist primarily of selling our products, licensing our IP, providing product and IP engineering services, and conducting research and development of our products and technology. As of November 1, 2025 and May 3, 2025, we had $567.6 million and $236.3 million in cash and cash equivalents, respectively, and working capital of $1,103.1 million and $605.8 million, respectively. Our principal use of cash is to fund our operations, invest in research and development and acquisitions of complementary businesses or technologies to support our growth. See Note 8 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a further discussion of our cash requirements under non-cancelable purchase obligations.

Previous wording

We believe our existing cash and cash equivalents and other components of working capital will be sufficient to meet our needs for at least the next 12 months and in the longer term. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, customer demand and the continuing market acceptance of our solutions. In the event that we need to borrow funds or issue additional equity, we cannot be assured that any such additional financing will be available on terms acceptable to us, if at all. If we are unable to raise additional capital when we need it, our business, results of operations and financial condition would be adversely affected.

Current wording

During the three months ended November 1, 2025, the Company received $384.6 million in net proceeds through the issuance of 2.7 million ordinary shares under the At-The-Market Offering. See Note 1 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a further discussion of our arrangement under the At-The-Market Offering. We believe our existing cash and cash equivalents and other components of working capital will be sufficient to meet our needs for at least the next 12 months and in the longer term. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, customer demand and the continuing market acceptance of our solutions. In the event that we need to borrow funds or issue additional equity, we cannot be assured that any such additional financing will be available on terms acceptable to us, if at all. If we are unable to raise additional capital when we need it, our business, results of operations and financial condition would be adversely affected.

Previous wording

Cash Flows Provided by (Used in) Operating Activities

Current wording

Cash Flows Provided by Operating Activities

Previous wording

Net cash provided by operating activities was $54.2 million for the three months ended August 2, 2025. The cash inflows from operating activities for the three months ended August 2, 2025 were primarily due to net income of $63.4 million adjusted for the following non-cash items: share-based compensation expense of $35.5 million, depreciation and amortization of $5.5 million and other non-cash items of $2.0 million. This was offset by $49.2 million of cash outflows from working capital for the three months ended August 2, 2025, which was primarily driven by (a) an increase in accounts receivable of $19.1 million primarily due to increased sales in the three months ended August 2, 2025 compared to three months ended August 3, 2024; (b) an increase in inventory of $27.5 million to support unfulfilled backlog and related new product ramps and (c) an increase in accounts payable of $9.0 million due to timing of payment for purchases of property and equipment.

Current wording

Net cash provided by operating activities was $115.8 million for the six months ended November 1, 2025. The cash inflows from operating activities for the six months ended November 1, 2025 were primarily due to net income of $146.0 million adjusted for the following non-cash items: share-based compensation expense of 80.8 million, depreciation and amortization of $12.0 million and write-downs for excess and obsolete inventory of $8.1 million. This was offset by $131 million of cash outflows from working capital for the six months ended November 1, 2025, which was primarily driven by (a) increase in accounts receivable of $83.1 million primarily due to large billings from customers not due yet in the six months ended November 1, 2025; (b) an increase in inventory of $66.4 million to support unfulfilled backlog and related new product ramps; and (c) an increase in accounts payable and other current liabilities of $18.5 million due to timing of payments for inventory purchases and ATM fees to bankers.

Previous wording

Net cash used in operating activities was $7.2 million for the three months ended August 3, 2024. The cash outflows from operating activities for the three months ended August 3, 2024 were primarily due to $21.5 million of cash outflows and $9.5 million in net loss, partially offset by $23.8 million of non-cash items. The cash outflows from working capital for the three months ended August 3, 2024 were primarily driven by (a) an increase in accounts receivable of $12.2 million primarily due to large billings from customers not due yet in the three months ended August 3, 2024; (b) an increase in inventory of $5.4 million to support unfulfilled backlog and related new product ramps; (c) a decrease in accrued expenses, compensation and other liabilities of $3.7 million due to ESPP purchase and final billing payment made for one of our technology license obligations and (d) an increase in contract assets of $2.8 million due to certain product engineering services and IP licensing arrangements where certain billing milestones were not met prior to the timing of revenue recognition. These cash outflows were offset by cash inflows relating to an increase in accounts payable of $5.8 million due to amounts payable relating to increased external consultation fees associated with general and administrative and outside research & development services.

Current wording

Net cash provided by operating activities was $3.0 million for the six months ended November 2, 2024. The cash inflows from operating activities for the six months ended November 2, 2024 were primarily due to $50.6 million of non-cash items, partially offset by $33.7 million of cash outflows for working capital purposes and $13.8 million of net loss. The cash outflows from working capital for the six months ended November 2, 2024 were primarily driven by (a) an increase in accounts receivable of $22.1 million primarily due to large billings from customers not due yet in the six months ended November 2, 2024; (b) an increase in inventory of $12.6 million to support unfulfilled backlog and related new product ramps; and (c) a decrease in deferred revenue of $2.0 million due to satisfaction of performance obligations over the passage of time.

Previous wording

Net cash used in investing activities of $67.8 million in the three months ended August 2, 2025 was primarily attributable to purchases of certificates of deposit for $115.0 million and purchases of property and equipment of $2.8 million, offset by maturities of certificates of deposit for $50.0 million. Purchases of property and equipment primarily related to third-party IP licenses and computer equipment and software used for research and development purposes.

Current wording

Net cash used in investing activities of $159.6 million in the six months ended November 1, 2025 was primarily attributable to purchases of property and equipment of $26.0 million, purchases of certificates of deposit for $115.0 million, and net cash payment for Hyperlume acquisition of $82.6 million, offset by maturities of certificates of deposit for $64.0 million. Purchases of property and equipment primarily related to mask set costs capitalized relating to the Company’s products already introduced or to be introduced, and third-party IP licenses and computer equipment and software used for research and development purposes.

Previous wording

Net cash provided by investing activities of $42.5 million in the three months ended August 3, 2024 was primarily attributable to maturities of certificates of deposit for $162.1 million, offset by purchases of the same for $113.7 million and purchases of property and equipment of $5.9 million. Purchases of property and equipment primarily related to third-party IP licenses and computer equipment and software used for research and development purposes.

Current wording

Net cash provided by investing activities of $171.5 million in the six months ended November 2, 2024 was primarily attributable to maturities of certificates of deposit for $313.1 million, offset by purchases of the same for $113.7 million and purchases of property and equipment of $27.8 million. Purchases of property and equipment primarily related to mask sets costs capitalized relating to the Company’s products already introduced or in process of being introduced, and third-party IP licenses and computer equipment and software used for research and development purposes.

Previous wording

Net cash provided by financing activities of $1.6 million for the three months ended August 3, 2024 was primarily attributable to $2.4 million in proceeds from exercises of employee share options and issuances of shares under the ESPP net of tax withheld for RSU settlement, offset by $0.8 million in payments for long-term technology license obligations.

Current wording

Net cash provided by financing activities of $374.9 million for the six months ended November 1, 2025 was primarily attributable to $5.2 million in proceeds from exercises of employee share options and net proceeds from the At-The-Market Offering of $384.6 million and offset by $4.8 million in payments for long-term technology license obligations and $10.1 million tax withheld related to RSU settlement.

Previous wording

Net cash used in financing activities of $3.0 million for the three months ended August 2, 2025 was primarily attributable to $3.9 million in payments for long-term technology license obligations, offset by $0.9 million in proceeds from exercises of employee share options and the issuance of shares under the ESPP net of tax withheld for RSU settlement.

Current wording

Net cash used in financing activities of $2.4 million for the six months ended November 2, 2024 was primarily attributable to $4.6 million in payments for long-term technology license obligations and $2.3 million tax withheld related to RSU settlement, offset by $4.4 million in proceeds from exercises of employee share options.

Previous wording

There have been no material changes to our critical accounting estimates during the three months ended August 2, 2025, as compared to those disclosed under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended May 3, 2025. In the current macroeconomic environment, our estimates could require increased judgment and carry a higher degree of variability and volatility. We continue to monitor and assess our estimates in light of developments, and as events continue to evolve and additional information becomes available, our estimates may change materially in future periods.

Current wording

Except for the accounting policy for business combinations that was updated as a result of our acquisition of the Hyperlume business, there have been no material changes to our critical accounting estimates during the three and six months ended November 1, 2025, as compared to those disclosed under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended May 3, 2025. In the current macroeconomic environment, our estimates could require increased judgment and carry a higher degree of variability and volatility. We continue to monitor and assess our estimates in light of developments, and as events continue to evolve and additional information becomes available, our estimates may change materially in future periods.